Question

A $12\%$ stock yielding $10\%$ is quoted at:

• A. Rs. 120
• B. Rs. 110
• C. Rs. 112
• D. Rs. 83.33

Answer 1

The correct option is A

Rs. 120

When Face Value and Market Value is not given, it is assumed that either of these is on 100 basis points when Dividend and Dividend Yield (Interest rate) are given in percentage.

Dividend Yield or Rate of Interest = $\frac{\text{Face Value}\times \text{Dividen}}{\text{Market Value}}$

$10=\frac{100\times 12}{\text{Market Value}}$

Market Value = $\frac{100\times 12}{10}=₹120$